November 17, 2006

Ultra-Rich Spend $50,000 to Hire a Private Tutor for Kids

posted by MR WAVETHEORY at 11/17/2006 04:59:00 AM
The ultra-rich in America are turning to private tutors to educate their kids. Think $10,000 or $20,000 for prep school is expensive? Meet Tiffany Wheeler.

Tiffany Wheeler is 16, lives in an apartment overlooking Lincoln Center and doesn't attend one of New York City's elite private schools. She doesn't go to public school, either. The teachers come to her.

``People have asked me if I'm spoiling my daughter,'' said Tiffany's mother, Charlene Royce. ``To me, there is no amount of money that is too much to get her the education and tools she needs to succeed.''

Royce said she and her ex-husband, Thomas, 78, an investor in Detroit, spend more than $50,000 a year for Tiffany's instructors in environmental science, geometry, American history, English and Spanish. Royce, a 45-year-old single mother and investor, also sends Tiffany to classes at Broadway Dance Center.


The last time that private tutors were popular was during the medieval period.

Readers Protest Against OJ Simpon "If I Did It"

posted by MR WAVETHEORY at 11/17/2006 03:31:00 AM
OJ Simpson is coming out with a book called If I Did It, Here's How It Happened OJ writes about how he would have murdered his wife Nicole Brown Simpson and her lover. For the record, OJ was found not guilty of the crime. As a result, critics are speculating that it is a confession of his murder.

On the Amazon message board, readers are already posting protests against Amazon.com, the publisher, and OJ for allowing the book to be distributed. Messages with headlines like "blood money", "do not buy this book", and "you've lost my business" are flooding the discussion boards. It goes to show how social media has really opened the dialogue.

The book is being released on November 30, 2006 and Amazon.com is offering it for 34% off for $16

Why Is Ross Levinsohn Leaving Fox?

posted by MR WAVETHEORY at 11/17/2006 03:27:00 AM
Ross Levinsohn was spotted at the Web 2.0 Summit earlier this week.

Ross Levinsohn did a terrific job at New Corporation. He bought MySpace for "just" $580 million and it's now worth $6 billion according to Rupert Murdoch. News Corporation (NYSE NWS) should be happy about it. I was surprised when the announcement came Ross Levinsohn of Fox Interactive Media, has resigned. He will be replaced by his cousin, Peter Levinsohn, currently president of digital media for Fox Entertainment Group. Ross Levinsohn shepherded Fox's recent efforts to boost its Web presence. Among other strategies, he was behind News Corp's $580 million purchase of MySpace last year.

In addition, he spearheaded Fox's efforts to distribute TV shows online, on MySpace.com and local affiliate sites. Several weeks ago, Fox debuted "The O.C." on MySpace and 24 local TV Web the week before the show's broadcast date. Earlier last month, Fox placed a slate of current season programs--"Bones," "Prison Break," "Standoff," "Vanished," "Justice," "Talk Show With Spike Feresten," "'Til Death," and "The Loop"--on MySpace and sites of local television affiliates.

Nielsen NetRatings - Top Automotive Sites

posted by MR WAVETHEORY at 11/17/2006 12:51:00 AM
Nielsen reported some interesting data on the top automotive destinations on the Internet.
  • The top destinations are eBay Motors (Nasdaq EBAY), AOL Auto (NYSE TWX), and Kelley Blue Book. eBay Inc. had 5.2 million uniques which is twice the audience of AOL Auto which had 1.9 million uniques.
  • The predominant demographic of auto site visitors are 35-49. Males were 58% vs female were 42%.
  • The top automotive advertisers were General Motors Corporation (NYSE GM), Ford Motor Company (NYSE F) and DaimlerChrysler AG (USA) (NYSE DCX) which bought 38%, 33% , and 9% of impressions respectively. The Japanese car makers did not advertise as heavily. Toyota Motor Corporation (ADR) (NYSE TM), Nissan Motor Co., Ltd. (ADR) (NYSE NSANY), and Honda Motor Co., Ltd. (ADR) (NYSE HMC) accounted for 3.8%, 2.7%, and 2.4% of impressions.

Automotive Advertising Online: Sites, Types and Viewers

A drill-down into Online automotive advertising to reveal popular sites, reader demographics, advertisers, ad sizes and delivery types.





Top 10 Online Automotive Destinations Week ending October 15, 2006 US, Home and Work

Brand or Channel

Unique Audience (000)

Active Reach (%)

eBay Motors

5,261

3.94

AOL Auto

1,918

1.44

Kelley Blue Book

1,426

1.07

Edmunds.com^

1,347

1.01

Ford

1172

0.88

MSN Autos

1,148

0.86

AAA

1,092

0.82

Yahoo! Autos

1,078

0.81

Honda

1,073

0.8

AutoTrader.com^

996

0.75

Source: Nielsen//NetRatings NetView

Demographic Data for Automotive Category Month of September 2006 US, Home and Work


Target

Unique Audience (000)

Audience Composition (%)

Total


51,080

100

Male


29,990

58.71

Female


21,090

41.29

Age

2 - 11

1,004

1.97


12 - 17

2,880

5.64


18 - 24

2,235

4.37


25 - 34

7,755

15.18


35 - 49

19,040

37.27


45+

25,091

49.12


55+

11,817

23.13


65+

3,851

7.54

HH Income

$ 0 - 24999

2,625

5.14


$ 25000 - 49999

10,647

20.84


$ 50000 - 74999

13,405

26.24


$ 75000 - 99999

10,295

20.15


$ 100000 - 149999

8,485

16.61


$ 150000+

4,838

9.47


No Response

784

1.54

Source: Nielsen//NetRatings NetView

Data on the Automotive Industry Week ending October 15, 2006 US, Home and Work

Top 20 Advertisers

Company

Impressions (000)

Share of all Impressions

General Motors Corporation

771,047

38.4%

Ford Motor Company

664,270

33.1%

DaimlerChrysler Corporation

196,630

9.8%

Toyota Motor Corporation

75,961

3.8%

Nissan Motor Co., Ltd.

53,411

2.7%

Honda Motor Co., Ltd.

48,997

2.4%

Suzuki Motor Corporation

27,736

1.4%

Volkswagen AG

16,914

0.8%

BMW AG

14,237

0.7%

Hyundai Motor Company

11,617

0.6%

Mazda Motor Corporation

9,498

0.5%

Fitzpatrick Chevrolet-Buick-HUMMER

6,536

0.3%

Harley-Davidson, Inc.

6,057

0.3%

Bob Dance Automotive

4,319

0.2%

Bombardier

3,939

0.2%

Group 1 Automotive, Inc.

3,033

0.2%

Western Washington TDA

2,532

0.1%

Resnick Auto Group

2,253

0.1%

Van Chevrolet -Arizona

1,655

0.1%

BMW Bay Area

1,591

0.1%

Total

2,008,840

100.0%

Source: Nielsen//NetRatings AdRelevance

Top Ad Sizes





Dimensions

Impressions (000)

Share of all Impressions

Medium Rectangle

(300x250)

757,263

37.7%

Leaderboard

(728x90)

484,129

24.1%

Non-Standard Dimension


417,612

20.8%

Wide Skyscraper

(160x600)

150,086

7.5%

Skyscraper

(120x600)

45,927

2.3%

Full Banner

(468x60)

42,489

2.1%

Rectangle

(180x150)

36,349

1.8%

Half Banner

(234x60)

20,605

1.0%

Button #2

(120x60)

20,388

1.0%

Button #1

(120x90)

19,062

0.9%

Large Rectangle

(336x280)

4,819

0.2%

Micro Bar

(88x31)

3,918

0.2%

Square Button

(125x125)

3,190

0.2%

Vertical Banner

(120x240)

1,878

0.1%

Vertical Rectangle

(240x400)

706

0.0%

Square

(250x250)

466

0.0%

Total


2,008,887

100.0%

Source: Nielsen//NetRatings AdRelevance

Ad Delivery Types



Ad Delivery

Impressions (000)

Share of all Impressions

In-Page

1,957,038

97.4%

Expanding

46,638

2.3%

Over-Page

3,525

0.2%

Transitional

1,238

0.1%

Pop-Up

250

0.0%

Pop-Under

199

0.0%

Total

2,008,888

100.0%

Source: Nielsen//NetRatings AdRelevance

Note: Nielsen//NetRatings AdRelevance reporting data reflects advertising activity served on pages accessible via the World Wide Web and not within AOL's proprietary service

Is Sears Holdings Really a Hedge Fund?

posted by MR WAVETHEORY at 11/17/2006 12:30:00 AM
You have to love Eddy Lampert. He buys Sears Holdings Corporation (Nasdaq SHLD) whose core business was formerly known as retail, and proceeds to turn it into a hedge fund. According to Sears' earnings report, Lampert threw Sears' excess cash into $387 million of total return swaps during the quarter. Under the setup, Sears is paying a floating rate tied to LIBOR and receiving a return tied to several company stocks.

Sears earned more than half its net income in the fiscal third quarter ended Oct. 28 from investments in exotic derivatives designed to mirror the performance of company stocks. Net income tripled to $196 million, or $1.27 a share, despite weak sales at its Sears and Kmart stores. Of that amount, $101 million attributable to total return swaps. In the year-earlier quarter, the company earned $58 million, or 35 cents a share.

In Sears' earnings press release, under interest and investment income, Sear's devoted a full section to the swaps that it bought during the quarter. Sears did not describe the basket or index that the total return swap is linked to.

Eddie Lampert has managed to make the job of consumer retail analysts around the world truly interesting. Forget about doing channel checks and store visits during earnings season . Forget about building same store sales models. Figure out the swaps that Eddie Lampert is buying, and nail the earnings estimates.

Interest and Investment Income

The following table sets forth the components of interest and investment income as reported on the Company's condensed consolidated income statement. Amounts from prior periods have been reclassified to interest and investment income to conform to current period presentation. The Company previously reported interest income on cash and cash equivalents as a component of net interest expense, and reported other investment income as a component of other income.

13 Weeks Ended 39 Weeks Ended
October 28, October 29, October 28, October 29,
millions 2006 2005 2006 2005

Interest and investment
income
Interest income on cash
and cash equivalents $36 $16 $112 $51
Total return swap income 101 -- 101 --
Other investment income 3 24 28 35
Total $140 $40 $241 $86


The Company, from time to time, invests its surplus cash in various securities and financial instruments, including total return swaps, which are derivative contracts that synthetically replicate the economic return characteristics of one or more underlying marketable equity securities. In exchange for receiving the return tied to the position underlying a total return swap, the Company pays a floating rate of interest tied to LIBOR on the notional amount of the contract. The fair value of a total return swap is based on the quoted market price of the underlying position and changes in fair value of the total return swaps are recognized currently in earnings. During the third quarter of fiscal 2006, the Company entered into total return swaps and recognized $101 million of investment income consisting of realized gains of $66 million and unrealized gains of $38 million less $3 million of interest cost. As of October 28, 2006, the total return swaps had an aggregate notional amount of $387 million and a fair value of $38 million. These investments are highly concentrated and involve substantial risks. Accordingly, the Company's financial position and quarterly and annual results of operations may be positively or negatively materially affected based on the timing, magnitude and performance of these investments.

November 16, 2006

Irvine Sensors Corp. is a MicroCap Rocket

posted by MR WAVETHEORY at 11/16/2006 11:53:00 PM
Everyday, there is speculative activity in the smallest companies on Nasdaq. Today, the winner of the most speculative stock award is Irving Sensors Corp. (Nasdaq IRSN) which gained 123% today, +$1.32 to close at $2.39.

Irvine Sensors designs, develops, manufactures and sells miniaturized electronic products for defense, security and commercial applications. The company generated just $27 million in revenues in the trailing twelve months and lost $5.4. Sounds boring, but then it announced it received $16.6 million in new orders during the first six weeks of its 2007 fiscal year. Like any speculative stock, Irving proceeded to do what speculative stocks do best. It jumped as high as $3.30.

To its credit, Irvine Sensors has been growing revenues quite impressively for the last couple of years. Revenues were $23 million in 2005, $13 million in 2004, and $12 million in 2003. It has also managed to lose less and less money each year. It lost "just" $1.7 million in 2005, $4.1 million in 2004, and $7.3 million in 2003.

Nonetheless, there is some hair on this company. It has received a default notice from Pequot Capital. It doesn't sound too good.

Pequot’s event notice invokes a provision in the Notes that would require the Company to repurchase, not later than the third trading day following the date of delivery of the event notice, (i) the outstanding $10.0 million principal amount of the Notes at a repurchase price equal to the greater of (A) 125% of such outstanding principal amount, plus all accrued but unpaid interest thereon through the date of payment, or (B) 125% of the average of the closing prices of the Company’s common stock for the five trading days preceding the date of delivery of the event notice (the “Event Equity Value”) multiplied by the number of shares of common stock issuable upon conversion of such principal amount and all such accrued but unpaid interest thereon, and (ii) the Event Equity Value of any shares issued upon any conversion of Notes and then owned by Pequot. Pursuant to the Notes, if the Company fails to make such payment when due or, in the event the Company disputes in good faith the occurrence of the event stated in the event notice, fails to instead deposit such payment in escrow with an independent third-party escrow agent within five trading days of the date such payment is due, then the Event Equity Value becomes 125% of the greater of (a) the average of the closing prices of the Company’s common stock for the five trading days preceding the date of delivery of the event notice and (b) the average of the closing prices of the Company’s common stock for the five trading days preceding the date on which such required payment (together with such other payments, expenses and liquidated damages) is paid in full. Pursuant to the Notes, if the Company fails to pay such amounts, interest accrues on such amounts for the period from and including the due date of such payment to but excluding the date the same is paid in full, at a rate of 18% per annum (but in no event in excess of the maximum rate permitted under applicable law).

It probably means Pequot is trying to sell shares. According to this filing, Pequot has warrants that are struck at $2.60 and $3.10 per share.

In connection with the transactions contemplated by the Purchase Agreement, the Issuer issued the Series 1 Warrants to the Funds on December 30, 2005. The Series 1 Warrants are exercisable at any time on or prior to December 30, 2009 at an initial exercise price of $3.10 per share to purchase an aggregate of up to 1,002,278 shares of Common Stock. The Issuer issued the Series 2 Warrants to the Funds on December 30, 2005. The Series 2 Warrants are exercisable at any time on or prior to December 30, 2009 at an initial exercise price of $3.10 per share to purchase an aggregate of up to 343,876 shares of Common Stock. The exercise price of the Warrants is subject to adjustment for stock splits, stock dividends and certain other distributions and equity sales. Cashless exercise is permitted.

That would explain the wild price swings today.

Rambus Options Gain 7100%

posted by MR WAVETHEORY at 11/16/2006 11:27:00 PM
On November 16, 2006, Rambus options gained 7100% in a single day rising from $.025 per contract at the open to $1.80 per contract at the close. Investors who bought made at the absolute low made 71x their money. That ranks as a truly impressive gain. Even more amazing is the type of speculative activity that has surrounded Rambus Inc. (Nasdaq RMBS), a little company that holds an incredible amount of intellectual property in the area of DRAM.

Rambus is a company based in Los Altos, CA and the company became world famous for supplying the memory chips to the Nintendo 64 and subsequently the Sony PlayStation 2. Its chips are again in the Sony Playstation 3. Rambus XDR memory and FlexIO processor bus interface solutions are incorporated in the Cell processor in Sony's PlayStation 3.

Rambus is also famous for being embroiled in many intellectual property lawsuits. Rambus Direct RAM memory technology was intended to replace SDRAM and challenge DDR SDRAM as the standard memory used in computers, but it did not. The big memory makers balked at having to pay large licensing royalties to Rambus. An executive at Infineon Technologies AG (ADR) (NYSE IFX) was caught on the record saying, "[O]ne day all computers will be built this way, but hopefully without the royalties going to Rambus." However, Rambus owned a large number of patents and it sued and it won. The majority of Rambus revenues come from patent licensing. It has a virtual lock on key memory design technology.

That is why today was so interesting. Early in the morning, Rambus announced the end of an FTC hearing regarding its antitrust violations. Rambus ran hard because it appears unlikely that the commission will include DDR2 or DDR3 memory in its final remedy. That would limit any remedies, which could include capping Rambus' royalty rates, to older types of memory like SDRAM and DDR.

You can see the stock never looked back from the chart.

What is most amazing is the table below showing the top options gainers. Nine of the top 10 gainers were Rambus options.

The Top Options Gainers for 11/16/06
Rank Stock Option Option Symbol Close Change Volume Volume Change Open Interest Open Interest Change
1RMBSNOV06
20 Call
BNQKD.X1.81.775
(7100.0%)
5725857220
(150578.9%)
13247-60
(-0.5%)
2RMBSNOV06
17.5 Call
BNQKW.X4.254.125
(3300.0%)
121707749
(175.3%)
21536618
(3.0%)
3RMBSDEC06
22.5 Call
BNQLX.X21.9
(1900.0%)
71187098
(35490.0%)
657-
4RMBSDEC06
25 Call
BNQLE.X1.31.225
(1633.3%)
44644449
(29660.0%)
167-
5RMBSDEC06
20 Call
BNQLD.X3.052.825
(1255.6%)
106229731
(1092.1%)
2120-214
(-9.2%)
6RMBSJAN07
30 Call
BNQAF.X1.4251.3
(1040.0%)
64556249
(3033.5%)
19736-203
(-1.0%)
7RMBSJAN07
25 Call
BNQAE.X2.42.175
(966.7%)
50124677
(1396.1%)
8781223
(2.6%)
8ENTNOV06
7.5 Call
ENTKU.X1.21.075
(860.0%)
355235
(195.8%)
119728
(2.4%)
9RMBSJAN07
22.5 Call
BNQAX.X3.252.9
(828.6%)
42573901
(1095.8%)
6896135
(2.0%)
10RMBSFEB07
30 Call
BNQBF.X1.851.65
(825.0%)
743731
(6091.7%)
2031-
11RMBSFEB07
25 Call
BNQBE.X2.952.525
(594.1%)
16301592
(4189.5%)
253730
(1.2%)
12RMBSDEC06
17.5 Call
BNQLW.X4.84.075
(562.1%)
42613442
(420.3%)
5551374
(7.2%)
13NCTYNOV06
25 Call
NQTKE.X3.452.925
(557.1%)
96031
(3.3%)
829-254
(-23.5%)
14RMBSJAN07
20 Call
BNQAD.X4.33.6
(514.3%)
1125810470
(1328.7%)
14051207
(1.5%)
15RIMMNOV06
135 Call
RFYKG.X1.0750.9
(514.3%)
89187619
(586.5%)
4636533
(13.0%)
16RMBSFEB07
22.5 Call
BNQBX.X3.83.125
(463.0%)
1964419596
(40825.0%)
142546
(3.3%)
17HLFNOV06
40 Call
HLFKH.X1.1250.925
(462.5%)
168153
(1020.0%)
280715
(0.5%)
18MBINOV06
65 Call
MBIKM.X2.1751.725
(383.3%)
765568
(288.3%)
2749-31
(-1.1%)
19RATENOV06
35 Call
QIBKG.X3.052.375
(351.9%)
74-531
(-87.8%)
954102
(12.0%)
20RMBSFEB07
20 Call
BNQBD.X4.93.775
(335.6%)
49244859
(7475.4%)
38216
(0.2%)
Source: Yahoo! Finance

You can see the November 2006 20 Calls for RMBS jumped from less than $.025 cents to $1.80.

So, how much did traders make? About 57,258 Rambus November 20 call options were traded. To make an educated less, let's look at the price and volume. Assume half of the volume were buys and half were sells. You can see that about about half of the Rambus options traded before noon at roughly .25 each. The total value of these options would be $715,725. These options were trading at $1.80 at the close for a total value of $5,153,220. That implies they would have been worth $4,437,495.

Value at Close: $5,153,220
Cost of Options: $715,725
Net Profit: $4,437,495

That is a cool profit of $4.4 million. Who says the tech market is dead? Thank you FTC. Thank you Uncle Sam.

The Worlds Biggest Deadbeats

posted by MR WAVETHEORY at 11/16/2006 11:24:00 PM

I was searching around for data on the countries with the most external debt. I always thought that would be the US, but apparently it is Brazil. The US doesn't even show up on the top 10 list.

World Top 10 - Countries Most In Debt

Country Total External Debt ($)
Brazil 237,953,000,000
Russia 160,300,000,000
Mexico 150,288,000,000
China 149,800,000,000
Argentina 146,172,000,000
Indonesia 141,803,000,000
South Korea 134,417,000,000
Turkey 116,209,000,000
India 100,367,000,000
Thailand 79,675,000,000

Secrets of the iPhone

posted by MR WAVETHEORY at 11/16/2006 11:53:00 AM
In case you were wondering, Apple Computer, Inc. (Nasdaq AAPL) has contracted Hon Hai Precision aka Foxx to manufacture the iPhone.

According to Digitimes, a recent research report from BNP Paribas revealed that certain Taiwan component makers will be major beneficiaries.

BNP noted that shipments of an iPhone equipped with a 2-megapixel camera is slated for launch in the second quarter of next year. Annual shipments should total about 5-6 million units.

Taiwan component makers will start shipping mechanical components for the iPhone in the first quarter of 2007 but initial revenue benefits will be limited, as only one model has been planned.

Foxconn International Holdings (FIH), which was listed as the EMS provider in the report, declined to comment on the news.

The BNP Paribas reported also had a bill of materials for the iPhone. It looks like the beneficiaries will include Broadcom Corporation (Nasdaq BRCM), Infineon Technologies AG (ADR) (NYSE IFX), Intel Corporation (Nasdaq INTC), and Micron Technology, Inc. (NYSE MU).

iPhone supply chain overview

Item

Company

Remarks

EMS

FIH

-

Baseband solution

Broadcom, Infineon Technologies

Broadcom BCM 2122 solution

PCB

Tripod Technology, Unimicron Technology

-

Memory

Intel

-

Connector

Entery

-

Keypad

Sunrex Technology

-

LCM/LED

Sharp

-

Camera lens

Largan Precision

-

CMOS image sensor

Micron Technology

-

Camera module

Altus, Primax, Lite-On Technology

Altus will be the major supplier, Primax will be secondary and Lite-On to have small orders only

Casing

Catcher


Source: BNP Paribas, compiled by DigiTimes.com, November 2006.

Leading Hedge Fund SAC Capital Charged With Wire Fraud

posted by MR WAVETHEORY at 11/16/2006 04:09:00 AM
Hedge funds are all the rage and the king of hedge funds, or at least a prince among them, is SAC Capital which runs $10 billion. SAC has generated such high returns that it charges 50% carry. Clearly, their success has caught up with them.

Fairfax Financial Holdings Limited (USA) (NYSE FFH) is suing SAC Capital Management and a number of other hedge funds for supposedly running a smear campaign to drive the company's stock down and profit by short selling. Though SAC Capital and the other funds vigorously deny the allegations, Fairfax claims the funds used Spyro Contogouris and Max Bernstein as "operatives" to fabricate research reports and make harassing phone calls.

Now federal prosecutors have charged Contogouris with wire fraud and stealing $5 million from former employers.

According to the U.S. District Attorney's office, Contogouris continued to steal money from his employer even after he was fired. He allegedly used some of the money to purchase residences for himself and his family.

Contogouris was released Tuesday on a $200,000 bond. If convicted, he could face up to 20 years in prison and fines of more than $10 million.

The charges are unrelated to the Fairfax case, but add another level of complication to the already messy short selling controversy.

The Federal Bureau of Investigations has gotten involved in the matter, and agent B.J. Kang provided testimony against Contogouris. Kang has also provided testimony against another short selling figure, Michael Lair.

Last week, Lair was charged in a separate short selling matter also involving SAC Capital. Lair allegedly went to the attorneys of Biovail Pharmaceuticals, another company suing SAC for improper short selling, and offered to provide them with evidence against the fund. The lawyers provided him with $6,000 in travel-related expenses, but he never produced any evidence.

Lair later went to the lawyers of SAC and offered to sell them information against Biovail for $50,000. SAC's lawyers reported the matter to the FBI and Lair was subsequently arrested.

Hedge Fund Attemps Hostile Takeover of Ramen Noodle Maker

posted by MR WAVETHEORY at 11/16/2006 02:15:00 AM
I had to post this because it is so hilarious, proving there is no shortage of creativity in the hedge fund world. Steel Partners is attempting a hostile takeover of Myojo Foods Co., Ltd. (JP 2900), a maker of ramen noodles based in Japan. Myojo rebuffed the takeover by partnering up with Nissin Food Products Co., Ltd. (JP 2897), the inventor of ramen noodles. Meanwhile, Steel Partners has quietly amassed a 23.1% stake in Myojo. (FYI, in addition to ramen noodles, Steel Partners also has a penchant for porno - it owns 3 million shares of New Frontier Media (Nasdaq NOOF), a leading company in the space.)

Myojo Foods Company Limited was founded and established in Japan in 1950. For the past 55 years, Myojo has been involved in the manufacturing of instant noodles, continuing striving for better taste, quality and service. To date, there are 6 factories, over 20 sales branches and affiliated company throughout Japan. Myojo offers many different flavors of ramen
  • Myojo Chicken Tanmen
  • Myojo Onion Chicken
  • Myojo Hot Pepper
  • Myojo Chicken Abalone
  • Myojo Shrimp Tanmen
  • Myojo Vegetarian
Nissin has an interesting history. Nissin founder Momofuku Ando in 1958 brought the world the instant noodle by inventing chicken ramen for post World War II Japan. His idea was inspired by the view of a long line at a black-market food stall as people waited in winter cold for freshly made ramen. Nissin is famous for selling Cup Noodles. Nissin has expanded it Cup Noodles beyond Chicken Noodle and Beef Noodle. New flavors targeting the US market include:
  • Spicy Chile Chicken
  • Salsa Picante Beef
  • Salsa Picante Chicken
  • Salsa Picante
  • Shrimp Jalpeno
The business, however, relies on relatively young consumers, in short supply among Japan’s aging population. Companies like Nissin and Myojo are therefore being forced to tap overseas markets.

A Five Year Old's View on Smoking

posted by MR WAVETHEORY at 11/16/2006 02:11:00 AM
Kids today are so smart. Here is a 5 year old's views on smoking.

Q -- What do you think of smoking?
A -- It makes you sick and smelly.

Q -- Why do you think people smoke?
A -- I don't know. They must be bad, like my brother who clapped when Bambi's mother died.

Q -- Did you know today is the Great American Smokeout?
A -- Yes, teacher told us. She says it's a day when people should stop smoking so they will live longer and won't be stunned from society.

Q -- "Stunned"? Do you mean "shunned"?
A -- Right, shunned. Like boys with cooties.

Q -- Is the Great American Smokeout having an effect on Search?
A -- Yes, today I learned that searches on "great american smokeout" are up 43%. "Stop smoking" is up, too.

Q -- Any final thoughts on this issue?
A -- I hope people will quit smoking so I won't have to pay higher health care taxes when I'm older. That's not fair.

Handheld Entertainment Pulls a Google

posted by MR WAVETHEORY at 11/16/2006 12:55:00 AM
Meet the ZVUE 200. Its a distant cousin of the iPod.

Handheld Entertainment Inc. (Nasdaq ZVUE) wins the most speculative stock award for today. The company makes Personal Video Players - basically iPods videos- and it zoomed up 303% today because it bought a video website called dork.com and announced it would turn cash flow positive. The stock traded at $1.67 in the morning and by the close of business it had completely ignored the laws of gravity and reached $6.10. In the meantime, the float had turned over twice and everyone had made a bundle.

Is Handheld Entertainment trying to pull a Google? I think so. Is it a mini Google? Probably not.

For starters, Carl Page, the CTO of the company, is the brother of Larry Page of Google (Nasdaq GOOG) fame, so maybe there is a bit of Googleness in ZVUE. Just like his kid brother Larry, Carl purchased a video site, but that is where the similarities fall apart. One small difference: Handheld paid $1.5 million for dork.com while Google paid $1.65 billion for youtube.com. Another difference: Handheld zoomed up 303% the day after the announcement. In comparison, Google barely budged.

Handheld may be trying to copy Google, but it's hardly the same business. Handheld Entertainment is a hardware company. They sell $99 video players through Walmart that compete with the iPod. It's an interesting device but there's just one small problem - it comes with just 128MB of memory. ZVUE was even planning to do an iPod knockoff, but I think they realized in good time that competing against Apple is quite a tough calling in life, so they shelved their plans for releasing an MP3 player.

Handheld seems very speculative and that's why it wins the honor of being the most speculative stock of today. With 303% returns, who needs venture capital anymore? Don't even mention private equity. Is this a speculator's market or what?!

November 15, 2006

Price Discrimination at Charles Schwab Corporation and Fidelity

posted by MR WAVETHEORY at 11/15/2006 11:40:00 PM
I have always wondered why it costs more to execute a 5000 share trade than a 500 share trade at an online broker. For me, it is an economic puzzle, because surely, it doesn't cost 10x as much to route a 5000 share order than a 500 share order to the stock exchange. We're talking just a few more bits and bytes. That is why I was even more perplexed when I discovered that The Charles Schwab Corporation (NYSE SCHW) actively price discriminates againsts its regular customers and so does Fidelity Investments. I looked at the commission schedule for Schwab and the commission schedule for Fidelity and found that Fidelity and Schwab sometimes charge their regular customer 10 times more than their active customers when they buy or sell more than 1,000 shares of stock.

Regular Customers Get Ripped Off
Brokers typically price discriminate between their regular customers and their active customers. Regular customers typically pay a base commission plus a per unit fee. At Schwab for instance, regular customers pay $12.95 per trade plus .015 per share over 1,000 shares. At Fidelity, its $19.95 per trade plus .015 per share over 1,000 shares. As you can see, once a regular customer starts trading over 1,000 shares, the fees really start adding up. Let's say you placed a 5,000 share order for a stock.

Fee for 5,000 shares as a regular customer
Schwab: $87.95
Fidelity: $94.95

You can see that the cost of the order is close to $100. That is quite a bit of commission for one trade. Does it look better if you are an active trader?

Active Customers Do Not Pay Per Share Fee
For active customers, the story is different. Schwab charges a flat fee of $9.95 per trade if you trade over 120 times per year, while Fidelity charges a flat fee of $8 per trade. Schwab charges 25% more per trade than Fidelity. There are no per share fees at either broker. So, for the same 5,000 share order, the fees are as follows.

Fee for 5,000 shares as an active trader
Schwab: $9.95
Fidelity: $8.00

You can see that it costs about $10 at either broker. So, what can we conclude from this?

Fidelity and Schwab Charge Regular Customers 10 Times More for the Same Trade
As you can see from the data, Fidelity and Schwab charge their regular customers roughly 10x more than their active customers to execute the same trade. For the same 5000 share trade, active customers pay about $10, while regular customers pay $100.a As far as I understand, the cost of sending a bit or a byte over the wire is the same whether it is a bit or byte for a regular customer or an active customer. There is simply no good economic reason why this kind of price discrimination should exist.

Price discrimination in the brokerage industry is one of those mysteries I don't understand. I don't think any broker can claim that it costs 10x more to serve a regular customer than an active trader - especially since almost all transactions all completed online. In fact, it may be more expensive to service an active trader. For all you brokerage industry veterans out there, I'm curious what you have to say to this.

Hansen Medical - Name the Revenues of This Company

posted by MR WAVETHEORY at 11/15/2006 06:53:00 PM


Take a moment to review this income statement from Hansen Medical Inc. (Nasdaq HNSN). Tell me what are the revenues of this company.



Nine Months Ended

Period from


Years Ended December 31,

September 30,

September 23, 2002








(date of inception) to


2003

2004

2005

2005

2006

September 30, 2006



























(Unaudited)




(In thousands, except per share data)
Statements of Operations Data:
























Operating expenses:

























Research and development

$ 2,369

$ 5,199

$ 17,282

$ 14,319

$ 12,120

$ 37,305

Selling, general and administrative


1,615


2,095


4,382


2,885


6,445


14,769



















Total operating expenses


3,984


7,294


21,664


17,204


18,565


52,074



















Loss from operations


(3,984 )

(7,294 )

(21,664 )

(17,204 )

(18,565 )

(52,074 )
Interest income


32


205


427


189


989


1,654
Other expense








(36 )

(2 )

(222 )

(258 )
Interest expense








(130 )

(9 )

(498 )

(628 )



















Net loss

$ (3,952 )
$ (7,089 )
$ (21,403 )
$ (17,026 )
$ (18,296 )
$ (51,306 )



















Net loss per common share:

























Basic and diluted(1)

$ (8.13 )
$ (9.15 )
$ (19.14 )
$ (15.75 )
$ (12.12 )






















Weighted average number of shares used in per share calculations:

























Basic and diluted(1)


486


775


1,118


1,081


1,510























Pro forma net loss per common share (unaudited):

























Basic and diluted(1)









$ (2.44 )




$ (1.30 )






















Weighted-average number of shares used in pro forma per share calculations (unaudited):

























Basic and diluted(1)










8,754






13,865

(Hansen Medical S-1)
The first time I read it, I thought it was $12 million. Wrong. My mind played a nasty trick on me when I read this income statement the first time! You see, I had expected the top line to be the top line, so I had gone right ahead to read the right hand columns of the income statement, ignoring the caption on the left hand side. After all, the top line of the income statement is always revenues. Right? Not. In fact, there is no top line. This income statement starts with the operating expenses! I didn't catch this until I read in the MD&A, "To date, we have not generated any revenue. We do not expect to generate revenue until at least the first quarter of 2007 and only if we receive a CE mark for European clearance of our Artisan control catheters. Any revenue from initial sales of a new product is difficult to predict and in any event will only modestly reduce our continued and increasing losses resulting from our research and development and other activities."

In case you're wondering what Hansen Medical actually does, they are development stage company developing a robotic catheter system called Sensei.

The extensive know-how of surgeons is often limited by their primary tool – namely, their hands. Similarly, robots are capable of a precision and dexterity that is significantly beyond that of the human hand. Robots, however, cannot carry out surgery – they need to be controlled by surgeons.

By controlling the surgical tools (mounted on a robot) via an OMEGA Haptic Device, surgeons get the best of both worlds. They are fully in control of the surgical procedures, but they benefit from the precision and scaling ability of the robotic tools. As an added benefit, the computer controlling the robot can add haptic guidance information to prevent unwanted tool behavior, or to locally enhance the tool precision.

The Sensei™ Robotic Catheter System uses computed catheter technology to provide stable and predictable control of catheter movement. This innovative technology is designed to provide fine guide catheter control in three dimensions, to enhance the physician's ability to access hard to reach anatomy, repeat procedure steps, and maintain stability during interventional procedures.


The deal priced at $12 which is at the midpoint of the $11-$13 range. Hansen is raising $75 million by selling 6.25 million shares in the company to the public, a 30% stake in the company.